Fed Officials Signal Another Rate Hike Before Year-End — SkimNews
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- Federal Reserve expects another interest rate hike by year-end, with most officials assessing it 'likely appropriate' due to inflation above target and a stable labor market
- FOMC officials unanimously raised rates by 0.25 percentage points in September, despite prior reluctance from several members, showing consensus on tighter policy
- Kevin Warsh described the latest rate increase as removing 'a dose of accommodation,' a phrase interpreted by analysts as signaling potential further hikes
- 16 of 18 FOMC officials forecast at least one more rate increase in 2023, while none projected cuts until beyond 2027, reinforcing a hawkish long-term stance
- Core PCE inflation stood at 3% in August — below expectations but still well above the Fed's 2% target — contributing to officials' concerns about sticky price pressures
- Treasury yields have surged to levels not seen since 2002, driven by expectations of higher rates, AI-driven economic growth, and uncertainty around Treasury buyback programs
Why it matters: Financial markets face continued pressure as the Fed’s median projection for one more hike clashes with recent softer inflation data, making borrowing costs for consumers and the government more expensive than expected just weeks ago. The divergence between official forecasts and market hopes raises volatility risks ahead of the October and December meetings.
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